The bad news keeps on coming for most of the major PC makers, who were already dealing with poor holiday sales. Market research firm IDC reports that first quarter worldwide PC shipments are down 13.9 percent from the same quarter last year, the worst year-over-year decline since IDC began tracking shipments in 1994.

"Fading Mini Notebook shipments have taken a big chunk out of the low-end market while tablets and smartphones continue to divert consumer spending," said IDC's report. "PC industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8."

In short, netbooks are gone, Ultrabooks aren't selling as well as they could be, and things with touchscreens are succeeding at the expense of more "traditional" computers. IDC's report spends much more time blaming Windows 8 for the decline, going on to say that it "appears to have slowed the market" rather than supplying the sales bump that new Windows versions have provided in the past. But Windows 8 is certainly not the only culprit.

The two biggest losers (both worldwide and in the US) were HP and Dell, whose global shipments were down 23.7 and 10.9 percent from the first quarter last year, respectively (or, in hard numbers, a drop of about four million units for HP and about one million units for Dell). These numbers are almost certainly made worse by ongoing corporate issues at both companies: HP's issues are numerous and well-documented, while Dell is trying to buy the company back from the shareholders while simultaneously making an IBM-like pivot from being a consumer hardware company to a software-and-services company.

By comparison, Lenovo has been running smoothly, and hasn't wavered in its commitment to the PC market. As such, its shipments stayed level worldwide at 11.7 million, and actually increased 13 percent (1.1 million) in the US—it was the only company listed to do so, though PC makers not in the top five for each territory are all lumped together, so data for smaller companies couldn't be analyzed. This wasn't enough to stem the losses from the rest of the PC makers, but since Lenovo is selling the same Windows 8 as everyone else, their performance shows that it's possible to do well selling the new operating system.

There's also Apple, a company whose sales should be positively affected (if anything) by a negative reaction to Windows 8. The company's worldwide sales aren't enough to put it in the top five, but its US sales are down 7.5 percent (some 110,000 units) from last year. The difference here is that IDC counts neither iOS nor Android devices as PCs—while Apple's Mac sales may be depressed, its iPad sales are going to more than make up for them. This is also applicable for PC makers who also make successful Android phones and tablets, Samsung and Asus among them.

As for the other PC makers, Acer is down 31.3 percent (1.8 million units) worldwide, Asus is down 19.2 percent (1.1 million units) worldwide, and everyone else is down a combined 10 percent (3.7 million units) worldwide. Asus, Acer, Toshiba, and many of these other companies are more active in the consumer market and in inexpensive devices like netbooks and low-end laptops—these devices are going to be particularly susceptible to cannibalization from tablets, and are generally more volatile than the businesses that HP, Dell, and Lenovo all cater to with many of their products.

IDC's numbers make two things clear: the first is that consumers and businesses are going to notice and respond when your company acts like it might pull out of the PC market, as evinced by Dell's and HP's numbers especially. The second is that if you make PCs but you haven't also been able to gain a toehold in tablets or phones, you may have a harder time of it going forward. If the PC market continues to contract, it's only going to become more competitive.

Looking ahead to the next quarter, we know that Intel is due to release new chips based on the "Haswell" architecture soon, and with those chips will come most of the PC makers' second wave of Windows 8 systems. There's a chance that these new chips (and the new designs they help to enable) will be able to convince more people to buy new PCs.

However, buying a new computer because of new hardware just isn't as necessary as it once was. Windows 8 requires no more horsepower to run than did Windows 7, which in turn would run on just about anything that would run 2006's Windows Vista. Some 38 percent of Internet users are apparently still perfectly happy with the twelve-year-old Windows XP. Windows 8, cannibalization by tablets, and corporate instability aren't going to make the situation any better, but the fact of the matter is that most people seem content with the computers they already have.

199 Reader Comments

Must say - we have moved all our new PC purchases to lenovo from HP. HP has switched up our rep 6 times in a little over two years making it nearly impossible to work with them. Lenovo has completely bent over backwards for us, in service and price.

Sub $1000 AIOs with next day onsite service... what more can you ask for...

Makes sense, not that unusual. Most people seem to run office applications, maybe the occasional game and video watching, and the processing to do that is rather low by today's standards. In other words, there's no big need for faster processing speed because everything (including phones and tablets) is starting to become powerful enough to handle basic tasks, with video and photo editing the only normal person's tasks I would consider that is above what most tablets can offer. And if the usability of traditional PCs continues to take a hit thanks to Microsoft's continued efforts to meld touch and mouse driven paradigms in a weird hybrid manner, no doubt this trend is going to keep occurring. However, faster Internet speeds at this point would help a lot more than improved processing, considering how long it takes to upload an album of photos on Facebook or similar. But this faster Internet would only marginally benefit traditional PCs for a limited amount of time, because tablets no doubt will be approaching the processing speeds of a mid-size laptop in a few years... or doing better than that. Plus they're just more portable.

Most corporate installations are now done with laptops. I haven't seen a predominately desktop environment in 3 or 4 years. I do contract work so I've been able to see at least the office spaces of about 15 different companies, all of them were running laptops for the vast majority of their office workers. Developers doing work for corporate vertical applications are still using desktops usually running Windows server software.

This is interesting since I just recently had to make a purchase for the company I work for new PC's for some departments. We've been a long-term customer of Dell but they recently have decided to make some rather drastic changes as to how they treat business customers.

For example, hey are switching completely to a pre-configured structure. What this means is that you can no longer custom build a system within a product line to meet specific requirements. For example, if you need a copy of Windows 8 Pro, and it's not part of their pre-configured systems, you're pretty much stuck with the consumer Windows 8 and will have to either use an MSDN license or purchase the software separate because they'll also no longer sell systems without an operating system. The only real selling point they have now is that they're desktop systems are still priced competitively against their competition.

Because of this, and the much higher costs, we went shopping for a new vendor. Surprisingly, HP forces business customers to use CDW and does not do direct sales. And to make matters even more odd if you see systems in their consumer line that would fit your needs you'll need to buy them thru their consumer site; they don't offer any kind of business-class support except for their "business" systems. And good luck trying to get them to ship a system without an OS or even one of your choosing.

We finally went with Lenovo mainly because even if they also do not allow for selling custom systems or those without an OS they have two advantages the others do not: cheaper prices and better discounts thru affiliate vendors they work with. I just don't understand why these companies think the way they currently do business is the right one. It's like they want to chase their customers away, or only cater to larger customers rather than the smaller businesses.

Must say - we have moved all our new PC purchases to lenovo from HP. HP has switched up our rep 6 times in a little over two years making it nearly impossible to work with them. Lenovo has completely bent over backwards for us, in service and price.

Sub $1000 AIOs with next day onsite service... what more can you ask for...

Yeah, that surprised me as well 'tho I'm still kind of puzzled about how leasing for one year and buying them after it's up is cheaper than just buying outright. But hey, if Lenovo keeps this up they'll be seeing another increase in sales numbers next year while HP and Dell go down even further.

It's a shame really since prior to all the Dell buyout talk their prices were excellent and their support top-notch. Now, I get the feeling like they're holding a fire sale and trying to push their smaller customers elsewhere. >.>

My second last computer is a core duo, 8gb ram, running fine. I think I put that together late 2009. My most recent, i2500k near 2 years old, 16gb ram, running fine. The hardware doesn't need to be upgraded anywhere near as often as it used to in the duron/athlon p3/p4 era.

For my laptop upgrade (from a 5-year-old Toshiba Satellite something that had all sorts of problems), I went with a Lenovo Y580, which happened to be on sale on their online store. It was the best deal I could find within my budget, and I had heard nothing but good things about Lenovo laptops.

I'm really happy with it so far; best laptop I've ever owned. Nice design, nice feel, powerful enough for all my gaming needs - only thing I could complain about is the low screen resolution, but that's my budget's fault rather than Lenovo's, as there were HD options available too for a few hundred more.

Just got a X1 Carbon in the last week or two, and it came like the article described. Had a Windows 8 sticker on the bottom, Windows 8 recovery DVDs...and Windows 7 installed. It also had a recovery partition on the SSD which I assume was 7, but I didn't verify it before I removed it.

The two biggest losers (both worldwide and in the US) were HP and Dell, whose global shipments were down 23.7 and 10.9 percent from the first quarter last year, respectively (or, in hard numbers, a drop of about four million units for HP and about one million units for Dell).

why is dell one of the two biggest losers? Is a 10.9% drop more than acer's 31.3% drop? Or perhaps, dell's 1.1m less PCs sold in the first quarter is more than acer's drop of 2.8m PCs?

Being not an American, can someone explain to me the maths behind this statement?

But to contribute some "meat" to the topic, I believe that there are two possibilities that may explain the results (the decrease in PC shipments).Firstly, it is possible that tablets/mobile phones may be canabalising salesSecondly, PCs now are "good enough" for most things, and thus, the need to upgrade is considerably less. Where once a 2/3 year upgrade cycle was expected, nowadays a five year cycle may be appropriate. Added to this, given our current economic climate - the desire to upgrade (particularly with businesses) is not on the horizon until revenues and profits improve by a considerable margin

It's something of a software issue. Very few applications that consumers use need alot of CPU power. Thus there is little need to buy new PCs. PCs have always been quite reliable as far as the electronics go..You only upgraded for the improvement in performance.

Mobile gadgets OTOH still have a ways to go - even if its just bigger screen/lighter weight etc.

why is dell one of the two biggest losers? Is a 10.9% drop more than acer's 31.3% drop? ...

Being not an American, can someone explain to me the maths behind this statement?

Acer has non-PC properties which are selling quite well - in particular, their Android devices like the Iconia. So a lot of that "loss" is really just cannibalization from the PC side to the Android side for them. Dell has no Android side - if they show a loss in PC sales, that's a loss in sales across the enterprise, and it hurts badly.

I hate to be negative, but after years of watching OEMs ship horrible computers? Bloating them out, ruining what could've been a perfectly worthwhile installation of Windows? I'll have to admit a degree of schadenfreude.

While I am not supporting corporate lobbying, cartels and or underhand tactics, the major OEM PC vendors should get into talks with governments of upcoming economies like Brazil, India, and some of the South American countries (and even African ones if need be) to set up assembly shops, and even component manufacturing in these countries. I do not know about China (pretty much everybody manufactures there) but there are significant cost cuttings possible with local assembly and avoiding customs/excise in these countries with as yet low PC penetrations levels.

As the article points out, the days of Windows needing bigger/better/faster hardware are over, since W7 came into the market, the high-penetration Western markets are saturated (and their economies are not in the best shape) and people are not going to buy new PCs unless it dies on them - because it serves their purpose well enough - for the most part. The growth will be in countries like India, Brazil, South Africa, etc.

The vendors will also have to look into the possibility of pre-loading Linux into computers, and get out of the clutches of Microsoft. This is because MS is going to only improve their anti-piracy features, and the piracy levels will come down from the XP era ... and the work-around that OEMs have been unofficially following in these markets (sell with "Free DOS" and hope the customers get their pirated Windows from the neighbourhood techie) will start becoming difficult. Linux offers the best option here, both in terms of usability, cost and meeting the legal compliance.

And lastly, consumers in these places are (a) very price conscious (b) very susceptible to becoming lax about the the rights of MS or some other mega-corps' rights. So many will rather pirate than pay a non-trivial sum say 10% of hardware cost for an OS - so the hardware vendors should take the easier way out - make the PC fully functional out of the box with Linux rather than selling with "Free DOS".

A lower price point will go a long way to make PCs affordable. I have seen really old tech (say C2D CPU loaded laptops) being sold at more than entry level prices in India, for example. The companies should sell PCs with at least <2 year old technologies - something which is being seen in the smartphone market for example. This simply is bad business practice - there are options for growth in these emerging markets, to think consumers there are ill informed or foolish or both and cell them old milk in new bottles simply won't do - they will take a sniff and walk away. In fact many if not most of the consumers in these markets are more discerning and tight-fisted than those in Western markets - especially US ones.

It's really too bad. I thought putting a touch screen on a laptop/desktop was a stupid idea, too.

And then I tried a Lenovo Yoga, and was forced to admit I was wrong. It's a great computer. And Windows 8 has actually moved personal computing forward, despite the naysayers out there who hate change.

Even if you don't like Windows 8, I think a lot of honest folks would agree it's added some much needed freshness and innovation to an otherwise stagnated computing environment. If I hadn't purchased a MBP at the end of 2011, I would be a happy owner of a Yoga today.

Bold prediction time: Microsoft is using the Xbox 360 (and whatever the successor is called) Kinect technology as basically a beta test to eventually roll out gesture based computing in Windows 9 or 10. I wouldn't be the slightest bit surprised to see them use that constantly refining technology to add another dimension to the personal computing experience in the near-to-mid future.

My second last computer is a core duo, 8gb ram, running fine. I think I put that together late 2009. My most recent, i2500k near 2 years old, 16gb ram, running fine. The hardware doesn't need to be upgraded anywhere near as often as it used to in the duron/athlon p3/p4 era.

Which brings up an interesting point - What are the sales figures for PC parts rather than pre-built boxes looking like? I (and by extension everyone in my immediate and extended family) have not purchased a pre-built PC is nearly 20 years.

I am not surprised at HP and Dell. I used to get my Mom Dells, but decided to switch after they ignored my threats about the unwanted paper blizzard of badvertising in the mail. The HP website had no way to get a decently specced machine though so I just hand built the PC.

Too true. Not until we have 14" full-HD screens, preferably low noise, certified 5+ hr. full powered battery life and ~2 kg (4-5 lbs) laptops are people going to take notice. And please, please get rid of the junk software (or provide a first run "clean start" option).

Anecdote: I'm in the market for a new laptop and after giving Windows 8 a test drive, I've stopped dead in my tracks. (I don't like Win 8) I am not a Mac user, so I want something with Windows 7.

Can I get a new system with Windows 7? Since a new laptop is not a priority, I haven't expended the effort to find out. But mine is a case where if I was easily able to get a new Win 7 system I'd have bought by now.

I run a shop for a business that deals almost exclusively in used Dell equipment. We sell off-lease and refurb business machines to consumers at 10 to 40 cents on the dollar vs new pricing. Even in a relatively tiny overall market we're seeing dips in the 10 to 20 percent range vs last year across all stores and the number of customers actively seeking non-Windows tablet devices has risen sharply. Apple does an excellent job of maintaining a limited secondary market for iPads and most "generic" Android tablets available to us on the wholesale side require retail pricing similar enough to offerings from Google, Amazon, and Acer while lacking any kind of comparable performance, getting into that game is a non-starter for us.

Happily even with that kind of decline we can still remain quite profitable and because we also run repair shops we have the added ability to draw revenue from the growing number of people who look to fix older units instead of replacing them. It's not uncommon to question why someone would spend $275 plus labor repairing a four year old Toshiba laptop instead of replacing it and be met with the response "It did exactly what I needed it to do until it stopped doing anything at all".

Where am I going with this? Not sure. What I am sure of is that I wouldn't want to be in the new PC business right now.

Edit: I specifically mention "non-Windows tablets" because we have Windows tablets in spades. Stylus, touch, multi-touch, pressure-sensitive, you name it. No one wants them. They want Android or iOS.

I was quite disappointed to hear of Dell's new business plan, because their desktops are really quite great for large installations. I wanted to check the HDD size in a new batch we got, and I had it in my hand within 15 seconds of taking the computer out: case with a easy latch, fairly light, drives mounted in slide-out bracket things. GPU's usually not screwed in, but have a piece that holds them in and is easy to release. Really slick case design for troubleshooting and replacing components. This is in stark contrast to the horrible disaster known as their clam-shell cases in the P4 era machines...

Laptops are becoming a more luxury item today. People want that minimalist industrial design Google's Pixel, Lenovo's laptops, and I guess Apple provide. They don't want to haul around some hideous plastic mess with stickers all over it. I personally am a desktop guy, but if I were to buy or have a need for a laptop it would be a device similarly styled to the Lenovo thinkpads/yogas or the Google Pixel.

Like RIM was 4 or 5 years ago, Dell is already dead, they just don't know it yet. There will be all sorts of revitalzation programs but nothing will arrest their death spiral. They only know how to make cheap boring machines and now they are perceived as abandoning the one thing they do well.

HP can still survive in a much diminished state as a printer company. Perhaps they can pivot into 3D printing and perhaps 3D printing might get really, really big as a semi-realization of a Star Trek transporter. Imagine just paying for the software to print an item ( Lego Blocks, say) rather than having the item made in a factory and shipped to a reatailer or customer. But right now that's pie in the sky thinking.